Fifty basis points. We now know that the Bernanke Federal Reserve is an aggressive Federal Reserve. Its action, in response to a housing downturn of increasing severity and substantial disruption in the credit markets, may prove to be wise. But its deep rate cut nevertheless should have been accompanied by a more hawkish statement.

There was always a case to be made for a 50bp cut. It will send a powerful stimulus into the real economy. Businesses will be able to finance their expansion, and creditworthy consumers their spending, on more attractive terms. That should help to offset any impact from the slowing housing market.